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Warning: Social Security PayBack System May be Discontinued
Old 01-01-2010, 06:32 PM   #1
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Warning: Social Security PayBack System May be Discontinued

I talked at a party with someone who works with the Social Security administration, at a pretty low level. I mentioned my plan to take SS at age 62, then pay it back and start over at 66 and he said "Oh, yeah, that loophole is going to go away very soon."

He was very confident about that, saying that they've been discussing it for a while.
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Old 01-01-2010, 06:38 PM   #2
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I would have been very surprised had that opportunity still been there when I turned 70 (16 years). Then again, glaciers can move quickly compared with government. And just because they close one loophole doesn't mean they won't open a couple others. I suspect they'll announce any change in time for anyone who is eligible to turn theirs in and make the best deal available.
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Old 01-01-2010, 06:43 PM   #3
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It shouldn't be news to anyone that Social Security must change. And I wouldn't expect those changes to be favorable.

Just to be prudent, I wouldn't count on any rule, regulation, or payment that had been in the past or that has been promised to be there in the future.

Nonetheless, there will be new rules and regulations that perhaps can be gamed for a slight advantage over the baseline.
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Old 01-01-2010, 07:22 PM   #4
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It shouldn't be news to anyone that Social Security must change. And I wouldn't expect those changes to be favorable.
Frank and I were just talking about this a minute ago, before I logged on to the board just now. We were discussing the warning on each SS statement saying that by 2041 they will only have enough money to pay 78 cents on the dollar for SS claims.

We are considering taking our SS at 62 instead of 66 (as we had previously planned), regardless of our life expectancies, because we think it is likely that such decreases in payments will be made earlier than anticipated.

Edited to add: We are thinking of doing this even if the "payback at 70" rule is eliminated.
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Old 01-01-2010, 07:47 PM   #5
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I kept planning to take mine at 70 and then decided to use the loophole and take it at 65, and NOW they are going to change it...grrrrr. Now I wish I had taken it at 62..@#$%!!!

Does anyone know yet when this loophole will close? For sure, anyway?

Will the government send us a notification about this? I have no idea how SS works.
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Old 01-01-2010, 08:37 PM   #6
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I may be completely mistaken about this, but I would think that the SSA cannot make this change unilaterally. My guess is that the curent "payback system" is rooted in the US Code, and therefore would require Congress to pass legislation mandating the change, and then subsequently have to be signed by the President.
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Old 01-01-2010, 08:46 PM   #7
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Another observation: Though it would be a PITA, I wonder if you couldn't continually "ratchet up" as the years go by: Start getting the checks at 63, pay everything back at 65 and then file again for the higher monthly payments, save these checks and do it again at age 67, etc. That way you still have free use of the money and you'd somewhat reduce the risk of locking in a severely reduced monthly payment if SSA changes the rules quickly.
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Old 01-01-2010, 09:19 PM   #8
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We are considering taking our SS at 62 instead of 66 (as we had previously planned), regardless of our life expectancies, because we think it is likely that such decreases in payments will be made earlier than anticipated.
It is my strong opinion that any change to make SS a worse deal will grandfather those who are already collecting. That has convinced me that I will start taking it as soon as I turn 62 (or whatever the minimum is when I get to it).

I pretty much knew that all the recent attention paid to this loophole would make sure it wasn't still around for me.
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Old 01-01-2010, 09:21 PM   #9
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I have no idea how SS works.
I thought this is how it works. We send in money. They give back what they still have budget for or think we deserve, whichever is less.
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Old 01-01-2010, 09:35 PM   #10
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I've always said I'd apply for SS as soon as I can.

Now...if I had a mortgage, I wonder if I should pay it off?
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Old 01-01-2010, 09:38 PM   #11
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Nope - I take the money early (62 in 2005) - and if the readers of this forum pass the hat and form a lobby promising to support me in the style to which I've grown accustomed - then I give the money back and we reset the dispense -o-meter at a higher level.



Or put in the fix for 4 years til I turn 70.

heh heh heh - Fairy tales can come true they can happen to you. In the mean time - I take the money and spend it.
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Old 01-02-2010, 02:47 AM   #12
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only 77 people in the entire country have done this, hardley a matter that needs fixing.
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Old 01-02-2010, 05:52 AM   #13
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I turn 62 tomorrow; I'm delaying SS till age 70 (for the benefit of my DW).

If you are interested, there has been a recent discussion on the subject on the BH's discussion site:

Bogleheads :: View topic - Best Age to Start Social Security Payouts=
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Old 01-02-2010, 06:33 AM   #14
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I will be 62 this April and was considering doing the payback thing. Hate to start early and then find out i can't do it. It is a tough decision.
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Old 01-02-2010, 07:31 AM   #15
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only 77 people in the entire country have done this, hardley a matter that needs fixing.
What he said.
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Old 01-02-2010, 07:58 AM   #16
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I just hope SS covers my future insurance premiums at this point.
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Old 01-02-2010, 08:11 AM   #17
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Not sure if it is a regulation that can be changed without legislation or a law. But, either way, if you are able to track proposed changes you could still file your application under the current regs before a change could be made. So, take SS at 62, apply at 70 or when a change to the regs is proposed. Now tracking those proposals - that is a bit of a challenge. We need a SSA policy type to join our forum and keep us posted

Someone like Rescueme who is depending on the age 70 rate for a substantial spousal benefit would be at risk taking it early since the change might come too quickly for his needs. He could always plan to save the early distribution and invest it in a private SPIA if the SS buy back isn't available. That does get the most out (into his estate) if both he and his wife die in the meantime.
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Old 01-02-2010, 08:47 AM   #18
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Well, if I need to take the money and turn it back in at the due date to re-start at 70..so be it. I just wish I had done this at 62 instead of 65, but I did get maybe a few months of extra money totaling an amount that will pay for a nice dinner out some place I guess. Shucks...the government has no sense of humor at all.
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Old 01-02-2010, 09:12 AM   #19
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You don't have till 2041. As soon as the amount of money coming into SS is less than the money going out, SS will have to start cashing Gov. IOU's. At that point the Gov will have to borrow from somewhere else or raise taxes to cover those IOU's. If this article is right, and it does seem a little pessimistic, then next year is when that may happen.

Social Security crunch coming fast - MSN Money

If it is right, then the deficits we are running today, are just a drop in the bucket of what is to come. I have thought for a long time that the governments way out is to inflate it's way out of the mess, while changing the formula for COLA.
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Old 01-02-2010, 10:07 AM   #20
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Originally Posted by mathjak107 View Post
only 77 people in the entire country have done this, hardley a matter that needs fixing.
Maybe it's being driven by all the internet chatter about it. Everybody, hush!
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